Customs, Excise and Gold Tribunal - Delhi
Pyarelal Coir Products (P) Ltd. vs Commissioner Of Central Excise on 5 December, 2006
Equivalent citations: 2007(114)ECC336, 2007ECR336(TRI.-DELHI), 2007(209)ELT121(TRI-DEL)
ORDER
R.K. Abichandani, J. (President)
1. In this appeal the appellant challenges the order of the Commissioner (Appeals) made on 30.9.2004, upholding the order in original by which the adjudicating authority confirmed the demand of Rs. 54000/- under Rule 9(2) of the central Excise Rules, 1944, read with Section 11A of the Central Excise Act, 1944, due to non-accountal of 1500 Kgs. of primary foam blocks valued at Rs. 1,80,000/-
2. In the show cause notice dated 25.4.1995, the appellant was called upon to show cause as to why duty amounting to Rs. 54000/- on 1500 Kgs. primary foam blocks, said to have been destroyed in the fire accident on 5th/6th December, 1994, should not be demanded under Rule 9(2).
2.1 In their reply to the show cause notice, it was contended by the assessee that the accident was caused due to chemical reaction of the inputs that had gone into the final product, which awaited further processing on it, such as cutting of block of foam into sheets etc. It was contended that the combustion due to chemical reaction was noticed only after its occurrence. It was pleaded that since the goods were not cleared and they were destroyed by fire, duty demanded in the show cause notice may not be levied.
2.2 The adjudicating authority by its order dated 9.11.2002, held that in view of the rejection of remission of duty of Rs. 41,497.50 communicated by the order of the Deputy Commissioner dated 7.6.2002, the demand of Rs. 54,000/-, as raised through show cause notice dated 25.11.1995, stood confirmed. It was further held that demand of modvat credit taken on the inputs had become redundant as the demand on finished product was confirmed.
3. In the appeal before the Commissioner, it was contended that the Commissioner had rejected the application for remission on 7.6.2002, in respect of the goods destroyed by fire accident which took place in the factory of the appellant on 5th/6th December, 1994 without any valid reason and that the goods were destroyed while delivering the process of manufacture and while the finished goods were lying in the storage area. It was contended that the fire was caused by natural causes and all necessary and possible steps were taken to avert the losses and therefore, the adjudicating authority had no reason to deny the claim for remission of duty contained in the lost goods. The Appellate Commissioner held that the Commissioner was the only authority under Rule 147 of the Rules of 1944 to remit the duty involved on the goods destroyed due to an unavoidable accident and that the application for remission was rejected by the Commissioner as communicated by the order dated 7.6.2002 to the appellant. It was held that that, "in these circumstances the adjudicating authority had no option but to confirm the demand as raised through show cause notice dated 25.11.1995." The appeal was, therefore, dismissed.
4. It was contended on behalf of the appellant that the goods were destroyed in the factory before removal and therefore, the appellant was entitled to the benefit of the provisions of Rule 49 and the authorities below have wrongly invoked the provisions of Rule 147. It was also submitted that the copy of the order dated 7.6.2002, rejecting the application of the appellant for remission of duty, was not received by the appellant. The learned Counsel appearing for the appellant placed reliance on the decision of the Tribunal in Lalitha Chem Industries Pvt. Ltd. v. Commissioner of Central Excise, Daman , particularly on paragraph 3, in which the Tribunal observed that it was unable to see any negligence, or any purposeful act of causing fire and there are no foolproof safety measures to avoid altogether accidental fires through electric short circuits. This order was made only on an application for stay while deciding the question whether pre-deposit should be waived or not. Such an interim order cannot be cited as a precedent, because an interim order would not be binding even in the case in which it was made, when the matter is finally decided. The practice of citing the interim orders in the final hearing matters can lead to chaos and confusion, if it is not realized that interim orders do not adjudicate upon the issues which are involved and that such interim orders decide only the question whether pre-deposit should be waived or not. There is always fear of some observation made in an interim order which is not binding even in the matter in which it is made when finally decided, being carried into the other matters as a binding precedent without realizing that an interim order cannot constitute a binding precedent except when it is made by the Apex Court in which there is a declaration of law, which is binding on all courts. Such interim orders of the Tribunal, therefore, ought not to be cited as binding precedents for deciding other matters.
4.1 The learned Counsel also relied on the decision in Shiva Essential Oils & Chemicals v. Commissioner of Central Excise, Noida , in which it was held that the discretion conferred on the Collector of Central Excise to remit the duty, if the goods are lost or destroyed by an unavoidable accident cannot be exercised arbitrarily, but has to be exercised judicially and according to law.
5. The learned authorized representative for the department supported the reasoning and findings of the authorities below and submitted that the appellant had admitted in the memo of appeal filed before the Commissioner (Appeals) that the remission application of the appellant was decided by the Commissioner and communicated by the Deputy Commissioner (Technical) letter C.No. V(30)14-T/M/02/7737 dated 7.6.2002. The appellant had, therefore, misled the Tribunal by making a contrary statement in the appeal memo filed before the Tribunal in paragraph 5 of which it has been alleged that no order for disposal or rejection of the claim for remission of duty was passed and communicated to the appellant and thus the subject order in original upheld by the Appellate Commissioner has no legal backing and is void ab initio.
6. It is evident from the record that the appellant had admitted before the authorities below that his request for remission was rejected by the Commissioner as per the order dated 7.6.2002 communicated by the Deputy Commissioner (Technical). No copy of that order is placed on record and both the authorized representatives are not able to show that order despite being asked. The Commissioner (Appeals) as well as the adjudicating authority have taken decisions solely on the basis of this order and it was incumbent upon both the sides to have produced the order in order to appreciate as to under which provision it was made. The Commissioner (Appeals) has proceeded on the footing that the order rejecting the remission of duty was made by the Commissioner under Rule 147 of the Rules of 1944. Rule 147 relates to the power of Commissioner to remit duty on warehoused goods lost or destroyed and provides that, if any goods lodged in a warehouse are lost or destroyed by unavoidable accident, the Commissioner may in his discretion remit the duty due thereon provided that, if any goods be so lost or destroyed in a private warehouse, notice thereof shall be given to the officer-in-charge of the warehouse within forty eight hours after the discovery of such loss or destruction.
7. Rule 147 falls in Chapter VII dealing with warehousing. Under Rule 140, the Commissioner is empowered to approve and appoint public warehouses and to register private warehouses for the storage of excisable goods on which duty has not been paid. Obviously, therefore, the power to remit duty under Rule 147 is exercisable by the Commissioner only in cases where the goods are lost or destroyed by unavoidable accident in cases they are lodged in such a warehouse. In contradistinction with the provision of Rule 147, the proviso to Sub-rule (1) of Rule 49 contemplates that, no demand of duty leviable on the goods will be made, if to the satisfaction of the proper officer, they are shown to have been lost or destroyed by natural causes or by unavoidable accident during handling or storage in such store-room or other approved premises. The question whether the goods are accounted for or not is to be examined under Rule 49 while considering the liability to pay duty which arises only when the goods are about to be issued out of the place or premises specified under Rule 9 or about to be removed from a store-room or other place approved by the Commissioner under Rule 47. The authority empowered to reach satisfaction under the proviso to Sub-rule (1) of Rule 49 is the "proper officer" in respect of the goods which are said to have been lost or destroyed by natural causes or by unavoidable accident during handling or storage in the store-room or other approved premises, as contemplated therein, while the authority for deciding on remission of duty on warehoused goods lost or destroyed will be the Commissioner under Rule 147. Since the order made on 7.6.2002 has not been produced, nor is it discussed by the authorities below, it is difficult to appreciate as to how the Commissioner exercising power under Rule 147 in respect of warehoused goods could have decided the non-accountal goods, which are said to have been destroyed before their removal in the context of the proviso to Sub-rule (1) of Rule 49. It was necessary for the Commissioner (Appeals) and the adjudicating authority to have examined and indicated in their orders as to the nature of the power which was to be exercised while making orders dated 7.6.2002, because the proviso to Sub-rule (1) of Rule 49 and Rule 147 operate in distinct fields of their own. The authorities below have virtually, refused to go into the merits of the appellant's claim made in the context of the proviso to Sub-rule (1) of Rule 49 on the ground that the Commissioner had rejected the appellant's claim and that "the Commissioner....is the only authority under Rule 147 of the erstwhile Central Excise Rules to remit duty involved on the goods destroyed due to an unavoidable accident...." For the foregoing reasons, the matter is required to be remanded to be reconsidered by the adjudicating authority. The impugned order of the Commissioner (Appeals) is, therefore, hereby set aside and the matter is remanded to the adjudicating authority for a fresh decision in accordance with law and in the light of this judgment, after hearing both the sides. The appeal is accordingly allowed by way of remand.
(Dictated and pronounced in the open Court on 05.12.2006)